Gold (XAU) Daily Forecast: Market Eyes PPI Data; XAU to Target $2365 Today?

The Gold (XAU/USD) price witnessed a slight recovery to $2,340 on Thursday, making up for some of the losses incurred after a recent U.S. Consumer Price Index (CPI) report showed inflation remaining persistently high.

Despite this, the U.S. Dollar remains near its year-to-date high ($105.30), bolstered by the market’s expectation that the Federal Reserve may postpone interest rate cuts due to ongoing inflation concerns.

Furthermore, the Federal Reserve’s March meeting minutes suggested a possible extension of higher interest rates, adding support to the Dollar and presenting challenges for gold, a non-yielding asset.

Inflation Data and Treasury Yields Affect Gold Prices

The rise in U.S. Treasury yields, fueled by higher-than-anticipated inflation figures, pressured gold prices downward. The Bureau of Labor Statistics reported a 3.5% year-on-year increase in the headline CPI and a 0.4% monthly rise, exceeding forecasts.

The core CPI, excluding food and energy, also surpassed expectations at a 3.8% annual rate, intensifying concerns over prolonged high interest rates by the Fed.

Fed’s Rate Cut Expectations Adjusted

Market reactions to the inflation report and FOMC minutes have shifted expectations for the Fed’s rate cuts to September from previously anticipated June, with fewer rate reductions expected this year.

Yields on U.S. government bonds soared to their highest since November last year, pushing the Dollar to new highs.

Geopolitical Concerns Persist

Lack of progress in ceasefire discussions between Israel and Hamas, along with potential retaliatory actions from Iran following a suspected Israeli airstrike, continue to influence market sentiment.

Upcoming Events Impacting Gold

Market participants are keenly awaiting the Core Producer Price Index (PPI) data, with forecasts pointing to a 0.2% month-over-month increase, down from the previous 0.3%.

Additionally, the U.S. Unemployment Claims are expected to come in at 216,000, slightly below last week’s 221,000.

Gold Prices Forecast

Gold (XAU/USD) is currently trading near $2,337, showing a slight increase of 0.13%. The pivot point for today’s market is at $2,327.66, indicating a potential base for the day’s trading range. Resistance levels are set at $2,365.76, $2,389.83, and $2,411.30, where sellers might emerge.

On the flip side, immediate support is found at $2,303.20, with further cushioning at $2,278.34 and $2,253.71. The 50-day EMA at $2,303.37 and the 200-day EMA at $2,198.03 suggest an ongoing buying trend, with prices supported within an upward channel.

Gold’s outlook remains bullish above $2,327.66, but falling below this pivot could trigger a significant downward correction.